“Plus they’ve never been particularly active in the export market anyway,” Cleveland said. “I think the market has been telling us that for some time. I don’t consider the market to be at an artificial level. I do understand the concern about China possibly changing its mind (deciding to liquidate its reserve), but it makes no economic sense for China to change their minds. We’re dealing with a new ballgame there.”

Kelli Merritt, a cotton producer, broker and merchant from Lamesa, Texas, says the cotton market has settled down somewhat, “and that’s a good thing. Two years ago as the U.S. crop began to get really short, there was this panic buying. This year, there has been a real resolve and acceptance across-the-board.”

Like Cleveland, Merritt believes China’s plan is to hold onto its reserve for the time being. “When they were disappointed in the $1.49 price, that tells you that they have to keep that price up. As long as China keeps their price up, and they’re not dumping their reserves, prices are going to stay good for us, and there’s going to be interest in our cotton from the Chinese. So every time they get more quota released, they’re going to use it, and they’re going to buy U.S. cotton.”

Texas A&M Extension professor emeritus Carl Anderson believes there is still a lot of risk in the market. “We’re getting comfortable where we are between 85 cents and 90 cents, but there are only a couple of million bales difference between foreign production and consumption. That’s a sensitive area for our exports.”

Anderson says producers could try to put a floor under the market, or a floor and ceiling, using options. “Farmers can use options in a way that won’t cost a lot, and they can have some sort of insurance,” Anderson said.

Anderson sees a price range of between 80 cents and 92 cents for December 2013, “with the risk of prices going to as low as 70 cents being a real possibility.”

“I see the market a whole lot stronger than 70 cents,” said O.A. Cleveland. “The lowest I can see the market going is 78 cents to 79 cents. I personally think the floor for December at 82 cents. I’m looking at a top in the market of $1.05. But where we’re really going is where Mother Nature takes us.”

Merritt sees a range between 83 cents and the upper 90s. “I wouldn’t want to go much higher than that.”

Robinson says another downside risk “is that there is a big hedge fund in a net long position that’s underlying a big chunk of this rally. It they downshift out of that position, it could put us back in the lower half of the range.” Robinson’s forecast range is 70 cents to 90 cents.


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